Washington, DC:
An International Monetary Fund (IMF) mission led by Edouard Martin visited
N’Djamena from March 16–30, 2022 to conduct discussions for the first
review under the program supported by the ECF arrangement approved by the
IMF Executive Board on December 10, 2021. The new 36-month ECF arrangement,
in an amount of SDR 392.56 million (about US$570.75 million or 280 percent
of quota), will help meet Chad’s large balance-of-payments and budgetary
needs, including by catalyzing financial support from official donors.
At the conclusion of the visit, Mr. Martin issued the following statement:
“The Chadian authorities and the staff of the International Monetary Fund
(IMF) started discussions for the first review under the ECF-supported
program approved on December 10. These discussions will continue in the
coming days so as to reach understandings that could be submitted for
approval to the Executive Board of the IMF.
“Macroeconomic developments in 2021 were less favorable than anticipated.
Oil output contracted, owing to production difficulties experienced by a
major oil company, while non-oil activity was constrained by the scarring
effects of the COVID-19 pandemic, as well as adverse weather conditions due
to climate change. Overall, real GDP contracted by 0.3 percent, driven by a
3 percent reduction in oil production. While average annual inflation was
limited to -0.8 percent in 2021, the poor 2021-22 crop has fueled inflation
pressures, with food prices increasing by 6 percent y-o-y in January. These
pressures are expected to be aggravated by the war in Ukraine.
“Performance under the program was uneven. Two of the three end-December
2021 quantitative performance criteria were met, with the criterion on the
non-oil primary balance missed owing to expenditure overruns on military
equipment and on the wage bill, reflecting security and social tensions.
Progress has been made in the implementation of structural reforms, with
two structural benchmarks met while the reforms covered by the three other
ones expected to be finalized in the coming weeks.
“The outlook for 2022 remains broadly favorable but subject to significant
risks. After contracting the last two years, economic activity is expected
to grow by 2.3 percent in 2022, driven by a recovery in both oil and
non-oil productions. Driven by food prices, inflation is expected to rise
to about 4 percent on average. Risks to the outlook include: a possible
resurgence of the pandemic and further delays in vaccination; security
concerns; domestic debt rollover risk; and possible delays in implementing
reforms.
“In this context, discussions focused on measures to strengthen public
finances. Efforts to increase domestic revenue mobilization should be
intensified. While overall spending needs, including the wage bill, need to
be contained, social spending needs to be protected. In view of the high
oil price volatility, additional oil revenue will be used to rebuild
liquidity buffers and reduce the government reliance on domestic borrowing
from the constrained banking system.
“The IMF team also discussed with the authorities additional structural
reforms to be implemented in 2022-23. These reforms will notably focus on
strengthening public financial management and domestic revenue
mobilization, enhancing governance and transparency, and improving the
business environment.
“Discussions were also held on food insecurity. In the context of the 2022
humanitarian response plan, the authorities have prepared a framework to
provide assistance to the most vulnerable until the lean season. Along with
the assistance already provided by the World Food Program and the Food and
Agriculture Organization, the use of the SDR allocation will contribute to
the implementation of this plan by allowing the authorities to rebuild a
sufficient stock of cereals.
“The authorities are continuing discussions on a debt treatment with their
external creditors in the context of the G20 common framework. These
discussions will need to be finalized prior to the upcoming program review.
“The IMF team would like to thank the Chadian authorities and other
counterparts for their hospitality, excellent cooperation, and candid and
constructive discussions.”
The mission was received by Mr. Haroun Kabadi, President of the National
Transition Council. It met with Mr. Tahir Hamid Nguilin, Minister of
Finance and Budget, Mr. Mahamat Hamid Koua, Minister of Economy,
Development Planning and International Cooperation, Mr. Haliki Choua,
Minister Secretary General of the Government, Mr. Mahamat Ahmat Alhabo,
Minister of Justice, Mr. Ali Djadda Kampard, Minister of Trade and
Industry, Mr. Idriss Ahmat Idriss, the National Director of BEAC, and other
senior officials, as well as representatives of the private sector, civil
society and of international development partners.
